Indian Railway Finance Corporation (IRFC) would raise Rs 6,000 crore through tax-free bonds in the current fiscal year, the Lok Sabha was informed on Monday (10 August). IRFC has been authorised by the Railway Ministry to issue tax-free bonds for a total amount of Rs 6,000 crore during FY16 through public issue, Minister of State for Railways Manoj Sinha said in the House. Railways would utilise the funds to finance acquisition of rolling stock such as engines, coaches and wagons. (PTI)
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In fresh trouble for former Telecom minister Dayanidhi Maran, the Madras High Court on Monday (10 August) cancelled his interim anticipatory bail in the alleged illegal telephone exchange case and directed him to surrender before the CBI within three days. "...interim anticipatory bail is cancelled," Justice S Vaidhyananthan said while granting Maran three days time to surrender before the CBI, which is investigating the case. The Judge was passing the order after hearing arguments on the CBI plea for cancellation of Maran's interim anticipatory bail and also on the former DMK minister's petition that the interim bail may be made a permanent one. CBI has registered an FIR against Maran and others alleging that more than 300 high-speed telephone lines were provided at his residence here and extended to his brother Kalanithi Maran's SUN TV channel to enable its uplinking when Dayanidhi Maran was Telecom Minister from 2004-07. Apprehending arrest in the case, Maran had moved the court and Justice R Subbiah had on June 30 granted him anticipatory bail for six weeks subject to the condition that he appears before CBI on July 1 and cooperates in the investigation. CBI later moved the high court seeking cancellation of the anticipatory bail on the ground that he was not cooperating in the investigation. During the arguments in the previous hearings, Maran had contended that the CBI was seeking cancellation of his bail to malign him. P S Raman, counsel for Maran, had contended that no evidence had been provided so far to prove the allegations and wondered how BSNL telephone lines could be used to telecast videos. "How can you telecast cinema with telephone lines?" he had asked. Raman claimed that the CBI with an intention of maligning Maran was alleging he had not cooperated with the probe, that too, after the rejection of security clearance to the Sun Group, owned by his family, by the Home Ministry. He also said while the alleged fraud took place in 2011 as per CBI, the FIR was filed only in 2013. Additional Solicitor-General G Rajagopalan, who had appeared on behalf of CBI, however, said Maran’s custodial interrogation was important to find out the real beneficiary of the "fraud" and the quantum of loss caused to the exchequer.(PTI)
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Certainly, the Employees' Provident Fund Organisation's (EPFO) — the entity that handles a retirement fund corpus of Rs 8.5 lakh crore on behalf of 4.67 crore contributors — move to invest around Rs 5,000 in the equity market will lead to steady flow of domestic savings into the stock market, which will help provide stability. It will reduce market vulnerability to international events and change in risk perception in the global financial market. The move is part of Prime Minister Narendra Modi's agenda to reform Asia's third largest economy. The new EPFO rules may also help Modi hit an ambitious target of raising nearly $11 billion through selling stakes in state-run firms and minority stakes in private companies this fiscal year. Appointed by Modi last November, the soft-spoken Labour Minister Bandaru Dattatreya, had convinced some trade unions that the benefits of investing in stocks are greater than the risks. At present, some market experts believe that the move would expose the fund's large subscriber base to the rough and tumble world of volatile stock markets, Dattatreya thinks otherwise. The minister expressed optimism that the returns from the exchange-traded funds (ETFs) would be greater than the 8.75 per cent the EPFO pays out annually to its subscribers. Until now, EPFO's market exposure was limited to government and corporate bonds. It earned a return of 9.22 per cent on its investments last fiscal year, and paid 8.75 per cent to its subscribers. According to an article in Mint, in the past, the stock market had been driven by funds from foreign investors and availability of liquidity in the global financial markets. In 2014, foreign investors bought shares worth Rs 97,332.05 crore, while domestic investors were net sellers to the tune of Rs 30,884.28 crore. This has changed to an extent in 2015 on the back of strong fund flows from domestic investors. Domestic institutional investors have been net buyers of stocks to the tune of Rs 26,909.5 crore between January and July. Globally, pension funds have been among the biggest investors in the stock markets, including through ETFs. Even in Indian markets, foreign pension funds including from the US and various European countries, are among the biggest investors and they invest here as Foreign Portfolio Investors. An OECD survey in 2014 shows that large pension funds globally have about 30 per cent exposure to equity. This depends on the depth of the market, in other words, how much money it has. Many reports say, just like pension funds and insurance funds, EPFO's investment in the equity market will be restricted to only the top companies and governed by strict rules and accountablity. These are companies which are profitable and have a dividend paying track record. The Sensex on many occasions has delivered huge returns in comparison to a rather static returns offered by the EPFO. For instance, in 1999-2000, the Sensex posted returns of nearly 22 per cent compared with the 12 per cent interest rate on provident fund. In 2005-2006, the index shot up a whopping 65 per cent, while in 2009-10 the index soared 72 per cent on the back of robust foreign fund inflows. In all, the Sensex has delivered positive returns in 10 out of the last 16 years, showing the consistency in equity market performance, according to an article in the Firstpost. Indian shares were Asia's second-best performers in dollar terms last year but have retreated after hitting record highs in March, as investors grew disappointed with the slow pace of economic reforms from the Narendra Modi-led National Democratic Alliance (NDA) government. So far, the EPFO's entry is a good news for the equity markets as the organisation could become a major state-run investor after Life Insurance Corporation (LIC), supporting equity values in times of distress.
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As expected, the BJP has decided to buy time, and the BJP’s S S Ahluwalia-led joint parliamentary committee on land bill will now submit its “consensus report” on the contentious land bill only in the winter session of Parliament. The crucial Bihar elections would be over by then. In the last meeting of the joint committee, the BJP members had agreed to bring back the consent clause, and social impact clause in the bill, making it look more like the Congress’s 2013 Land Act. In its meeting on Monday, the Congress and TMC sought more time to study certain clauses, following which they were accused of indulging in “delaying tactics”. The committee was initially supposed to submit its report by Aug 11. Monday’s meeting was expected to evolve consensus on three key provisions of returning unutilized land to owners after five years, the retrospective clause, and the “money deposited in a an account is money deposited with the farmer” clause. The meeting however could only take up the retrospective clause during which the Congress members opposed any changes in provision of 24 (2) of the UPA Act.
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Over 60 channels are sitting on their reserve prices fixed before auctions, says Ashish Sinha Despite having conducted 40 rounds of clock auctions that took two full working weeks, over 60 stations (out of 135 stations) across 28 cities (out of 69 cities) have seen zero interest from the 21 pre-qualified bidders even after the 10th day of bidding. The clock auctions are currently underway for the 135 stations across 69 cities where the collective bids have crossed Rs 1,000 crore, almost 2.5 times the reserve prices fixed. Experts pointed to the high reserve prices as one of the main reasons for a lack of interest from the bidders in so many cities where at least one or two stations are available for auctions. Analysts tracking the radio industry also blame the FM-III policy itself which had put a cap on any single FM operator owning more than 15 per cent of the total channels available. “There are several deterrents for the bidders. FM-III may be far away from the success envisaged by the policy makers who got swayed by the telecom spectrum auctions of 2010. FM penetration may just remain confined in only select cities even after three phases and 15 years of private radio operations,” said a senior analyst. Another experts pointed to the high reserve prices in certain towns which have added to the woes of the participating bidders. “Take for example the reserve price of channel in Kozhikode at Rs 7.02 crore. Money can’t be made by anyone even if this is the winning bid. Similar is the plight in Tirupati where the reserve price in Rs 4.5 crore. If only about half the channels are won by operators at the end of this first round of auctions, then the government should review its FM-III policy. No one is here to do charity,” said a technical expert on FM radio stations who advices leading players. According to a media analysts who tracks the radio industry, current bidders have put their money on established markets like Delhi, Mumbai, Bangalore, Chennai, Pune etc. “Compared to a reserve price of Rs 31.42 crore set for the lone channel available in Delhi, today it is worth Rs 144 crore and counting. Mumbai’s reserve price before auctions was Rs 35 crore. Today it is Rs 93 crore and counting. These numbers are very high but bidding is on. Clearly, the focus is on established markets,” the analyst said. Cities like Dhule, Gorakhpur, Gulbarga, Lucknow, Aligarh, and Jhansi are said to be among the 28 towns where the reserve price fixed before the auctions continues to be the price even after 40 rounds of clock auctions where the cumulative bids have crossed Rs 1,000 crore as against the cumulative reserve price of Rs 407 crore. Additionally, the government will get around Rs 1,600 crore as the renewal fees from the existing 245 FM Stations who will also be a part of the third-phase. “Operating FM stations in some cities for the winners may become unviable at the current rates. Creating scarcity and then calling for bidding is clearly a flawed idea which could have been rectified. Had there been 5 channels available in Delhi or Mumbai, things would have been different,” says a senior executive in a leading FM brand.
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India's central bank governor Raghuram Rajan may have reshaped monetary policy and brought down consumer inflation to the lowest in years, but convincing people like housewife Shaila Pai that prices are under control is proving a tough challenge. Entrenched expectations of high inflation in India are feeding into higher wages and other prices, which could tie Rajan's hands even as he faces growing pressure to cut interest rates for a fourth time this year to help a patchy economy. Pai, a mother of two in Mumbai, says she has yet to feel any benefit from offical data showing inflation is easing. Her living costs are as high as they have ever been and the family is cutting down on travel, eating out and personal spending. "The biggest part of our household expenses goes towards education, food and medicines, and all of them are very expensive. We can't cut corners much there," she said. "I expect hospital, food, education costs will continue to rise in the double digits." She is not alone. A survey by the Reserve Bank of India (RBI) this week showed households expect consumer inflation to hit 10.1 percent within three months, almost double the current 5.4 percent and a level not seen since late 2013. At its latest policy review on Tuesday, the central bank kept rates steady but held out the prospect of another easing after cutting the policy rate by three-quarters of a percentage point so far this year. "Price pressures are building up and these are sticky," said a senior policymaker familiar with the RBI's thinking. "We are cautious. We have to see whether core inflation will feed into headline numbers or not." Cost Of Living RisingSince becoming governor in September 2013, Rajan has refocused policy on consumer inflation instead of wholesale prices. Earlier this year, the government and RBI agreed on adopting a target to keep inflation between 2 to 6 percent. While that looks on track for now, core inflation, which excludes volatile fuel and food prices, has risen for the past six months, and reached around 5 percent in June. A 16.2 percent surge in urban wages in the January-March quarter, the biggest increase in 11 quarters, is a key driver of core inflation. "In everybody's mind, inflation is hovering at 8 percent," said Anandorup Ghose, a partner and head of rewards at Aon Hewitt, a global human resource solutions company. "For companies to give salary increases less than 10-10.5 percent, it almost seems like you are not giving a real pay increase compared to inflation." Other costs are also starting to rise, according to the RBI. Among the biggest increases have been in education, an expense few middle-class households in India are willing to cut. Education costs rose 7.23 percent in June, the biggest jump among the sub-sectors in the core CPI data, followed by clothing and then household goods and services. Rajan on Tuesday indicated the central bank would closely study the pace of inflation expectations and the way it impacts consumer behaviour. "If we really want to manage inflation, we have to look at the sum total of inflation, especially the inflation that confronts consumers because that is what determines things like household savings behaviour. It also determines the wage pressures that will come," he told reporters. (Reuters)
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China is under growing pressure to further stimulate its economy after disappointing data over the weekend showed another heavy fall in factory-gate prices and a surprise slump in exports. Producer prices in July hit their lowest point since late 2009, during the aftermath of the global financial crisis, and have been sliding continuously for more than three years. Exports tumbled 8.3 percent in the same month, their biggest fall in four months, as weaker global demand for Chinese goods and a strong yuan policy hurt manufacturers. "Policy focus is definitely the (producer) deflation at this stage," said Zhou Hao, economist at Commerzbank AG in Singapore. He said China's central bank would likely need to further cut interest rates again, having already cut four times since November in the most aggressive easing in nearly seven years. The gloom may only deepen in the coming week with a raft of economic data forecast to show renewed weakness in factories, investment and domestic spending. The world's second-largest economy is officially targeted to grow at 7 per cent this year, still strong by global standards, but some economists believe it is growing at a much slower pace. Economists expect the central bank to cut rates by another 25 basis points this year, and further reduce the amount of deposits banks must hold as reserves by another 100 basis points, according to a Reuters poll last month. The producer price index fell 5.4 percent from a year earlier, the National Statistics Bureau said on Sunday, compared with an expected 5.0 percent drop. It was the worst reading since October 2009 and the 40th straight month of price decline. Falling producer prices are worrying because they eat into the profits of miners and manufacturers and raise the burden of their debts. China's corporate debt stands at 160 percent of gross domestic product, twice that of the United States, according to a Thomson Reuters study of over 1,400 firms. In line with the sluggish economy, annual consumer inflation remained muted at 1.6 percent despite surging pork prices, in line with forecasts and slightly higher than June's 1.4 percent. Challenging Second HalfA cooling housing market, uneven exports and weak investment have cooled annual economic growth, which will be slowest in a quarter of a century even if it hits Beijing's target this year. A strong yuan policy - designed in part to support domestic consumption and help Chinese firms to borrow and invest abroad - is hurting exporters. Trade data on Saturday showed depressed demand from Europe and the first drop in exports to the United States, China's biggest market, since March. Chinese firms have laid off workers for 21 consecutive months as they slash prices to a six-month low to attract customers, an official survey showed this month. China's turbulent stock markets, which have fallen by almost a third since peaking in June, also add a new sense of urgency for top officials as they try to ensure a stable financial system can fund Beijing's efforts to rekindle economic growth. Yet, even the central bank has warned that looser policy may not be effective in lessening the pain felt by companies. Companies are holding back on spending amid a reluctance by banks to lend due to rising bad debts. "Maintaining a growth rate of 7 percent in the second half of the year will be a challenge," ANZ Bank said in a note at the weekend. "Monetary policy will need to become more supportive." (Reuters)
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After a gap of eight years, government on Friday (7 August) imposed 10 per cent import duty on wheat till March 2016 to curb inward shipments at a time when there is excess domestic stock. The move is expected to help the government fetch about Rs 90 crore. Finance Minister Arun Jaitley laid a copy of the notification on the decision in the Lok Sabha, saying it seeks to "impose basic customs duty of 10 per cent on wheat till March 31, 2016 under Section 159 of the Customs Act 1962. "The estimated revenue implicate of the above exemption is revenue gain of about Rs 90 crore in the remaining part of the year". Imports are happening despite bumper domestic wheat output in 2014-15 crop year and surplus stocks with the Food Corporation of India (FCI), the nodal agency for procurement and distribution of foodgrains. As world's second biggest wheat grower, India has a huge stock of over 40 million tonnes of the grain, of which more than half is of poor quality grain procured this year. Private traders are importing wheat on lower global prices and lack of high-quality grain in the domestic market needed for use in fast-food industry. They have already contracted 5,00,000 tonnes of wheat from Australia for the first time in a decade. After imposition of import duty, it looks unlikely that traders would be interested to contract more wheat. FCI has procured 28.08 million tonnes of wheat this year, of which 26.62 million tonnes have been purchased under the relaxed quality norms because the crop got damaged due to unseasonal rains early this year. The government is keen to sell off on priority basis the wheat which was procured under the relaxed quality norms through ration shops, welfare schemes and open market sales. Wheat production in India is estimated to have declined to 90.78 million tonnes in 2014-15, as against the record production of 95.85 million tonnes during 2013-14. Still, the government has a huge stock of wheat due to bumper procurement this year and carryover stock from the previous years.(PTI)
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Narendra Singh Tomar, Minister for Steel and Mines, said on Friday (7 August) that "82 mining blocks have been earmarked for auction and will be announced by end of October as Phase I. Another 96 blocks have been identified for phase II. This would be based on data provided by the Mineral Exploration Corporation to the states.” Tomar was speaking at the Mining Leaders Roundtable organised by the Confederation of Indian Industry (CII), in New Delhi. The Minister shared that he had already visited the mineral-rich states to sensitise on the opportunities for auction. He also confirmed that the private sector would be brought in as an equal partner into the process once the guidelines and framework have been finalised. Narendra Kothari, Chairman of CII National committee on Mining and CMD, NMDC outlined CII’s seven-point action plan for getting mining off the ground. These are: Creating a conducive framework for enabling exploring activity in the countryMore rationale tax and levies for mining - Variable DMF for encouraging exploration of marginal resourcesEnhancement of technological interventions to increase the rate of drilling and frequency of holes per unit areaAdoption of sustainable practicesSecurity of tenureEnable availability of large areas for reconnaissanceFormation of a Joint Task Force with representation from the industry to work with government for creation of National Exploration Policy R Sridharan, Additional Secretary, Ministry of Mines, while sharing the background to the recent amendments, said that the MMDR Act was drafted to strengthen the weak regulatory regime, minimize the environmental impact, and curb rampant illegal mining. Global best practices have been incorporated, he added. He stressed that the construct of the Act was designed to introduce simplicity, eliminate discrepancy and achieve credibility. S Vijay Iyer, Managing Director, Rio Tinto India, in his presentation, shared a global perspective on how to get mining off ground. He highlighted the enabling conditions for attracting investments in the sector and the learnings that can be derived by adopting global best practices in the Indian context. He highlighted that to maintain economics of projects, an effective tax system needs to be in place. Tuhin Mukherjee, Managing Director, Essel Mining & Industries Limited, presented the industry perspective from a standalone miner’s experience in the country and the challenges faced. He also emphasized on implementation of the Act by fast tracking the approval process, capacity building in states and suggested ways by which exploration can be encouraged in the country. Laxman Shekhawat, Chief Operating Officer, Hindustan Zinc Limited, shared his views from the non-ferrous sector and shared the company’s significant experience on exploration which led to developing a world-class resource at Rampur Agucha. Chandrajit Banerjee, Director General, CII suggested that the way to faster execution of mineral auctions would be for the Centre to template 5-6 projects, of different minerals, from the pre-bid stage to production across the mineral-rich states.
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Tourism industry is expecting 15 per cent growth in foreign tourist arrivals in the current fiscal, reports Haider AliTour operators and those in tourism and hospitality sector can expect better business as as the Government of India has extended the tourist e-visa facility to 76 countries. Winters are when foreign tourists from countries in Europe and Middle East visit India and now with the introduction of e-visa facilities tourism industry will likely see a rise in number of arrivals and pre-bookings. The NDA government introduced the e-tourist visa in November last year and initially citizens of only 12 countries were eligible for this. Tourism industry is expecting 15 per cent growth in foreign tourist arrivals in the current fiscal. The average annual growth was about 10 per cent in the last three years. Foreign tourist arrivals grew by 8.2 per cent over the previous year to 77 lakh during 2014-15. Achin Khanna, managing director for consulting and valuation practice at HVS South Asia said, "Given all the tourism push and thrust by the central government and the fact that overall we are seeing more interest from foreign tourists, both corporate and leisure, the growth may trump what you have seen in the past and you could see a 12-15 per cent growth in foreign tourist arrivals this year." According to the tourism ministry, the number of tourists under the e-tourist visa scheme grew to 1,26,214 in the six months to June, compared to 11,953 tourists under the visa on arrival scheme in the year-ago period. Under the e-tourist visa scheme, foreign tourists can apply for a visa by uploading their passport and photograph and paying the visa fee online. The authorities process the application and send an electronic travel authorisation or e-visa through email within 72 hours. While the occupancy rates declined from 60.6 per cent in 2010-11 to 57.8 per cent in 2012-13, average room rates too declined to Rs 5,531 in 2013-14 from Rs 6,513 in 2010-11. Mandeep Lamba, MD, India, hotels and hospitality group, JLL said: "The hotel industry is likely to see a highly reduced new supply of 4 per cent in 2015-16 which would result in occupancies showing an increase of 5-6 per cent over last year along with a corresponding gentle increase in average daily rates leading to a top line growth for the hotel industry of 6-7 per cent." In the first quarter of this fiscal, India received 15.5 lakh foreign tourists. If the projection of 15 per cent growth were to come true, at least 72.7 lakh foreign tourist arrivals are expected between July 2015 and March 2016.
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